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Dynatronics Corp. Reports Operating Results (10-Q/A)

August 26, 2009 | About:

Dynatronics Corp. (DYNT) filed Amended Quarterly Report for the period ended 2008-09-30.

DYNATRONICS CORP. is involved in the design manufacture and sale of medical devices for therapeutic use by medical practitioners. Dynatronics Corp. has a market cap of $11.8 million; its shares were traded at around $0.86 with and P/S ratio of 0.3.

Highlight of Business Operations:

During the quarter ended September 30, 2008, gross profit increased 9.0% to

$3,195,641, or 40.0% of net sales, compared to $2,932,312, or 37.2% of net

sales, in the quarter ended September 30, 2007. In the quarter ended September

30, 2007 gross profit as a percent of sales was lower than the current period

due to inventories of Dynatronics manufactured products in stock at the six

acquired independent dealers. Those inventories had a higher cost basis because

they were held in the dealer inventory at wholesale cost instead of manufactured

cost. This accounted for the approximately 2.8 percentage point difference

between gross profit in the current quarter and the similar period last year.



Selling, general and administrative ("SG&A") expenses for the quarter ended

September 30, 2008 decreased $598,848 to $2,976,647, or 37.2% of net sales,

compared to $3,575,495, or 45.3% of net sales in the prior year period. The

decrease in SG&A expenses for the quarter ended September 30, 2008 is related to

the following:



Research and Development ("R&D") expense during the quarter ended September 30,

2008 was $262,029, compared to $338,893 in the similar quarter in 2007. R&D

expense represented approximately 3.3% and 4.3% of the net sales of the Company

in the quarters ended September 30, 2008 and 2007, respectively. Management

anticipates R&D expense will increase in future quarters based on new products

that are under development. R&D costs are expensed as incurred. Dynatronics

intends to continue its commitment to developing innovative products for the

physical medicine market in fiscal year 2009 and beyond in order to position the

Company for growth.



Income tax benefit for the quarter ended September 30, 2008 was $51,878 compared

to income tax benefit of $397,040 in the quarter ended September 30, 2007. The

effective tax rate for 2008 was 27.2% compared to 35.8% in 2007. The lower

effective rate in 2008 is a result of franchise taxes that are required in

certain states which offsets the deferred tax benefits.



The Company has an $8,000,000 revolving line of credit with a commercial bank.

At September 30, 2008, the Company owed $5,648,780 compared to $5,818,320 at

June 30, 2008. Interest on the line of credit is based on the bank's prime rate

plus 1%, which at September 30, 2008 equaled 6.0% per annum. The line of credit

is collateralized by accounts receivable and inventories of the Company as well

as a security interest in the Company's headquarters facility in Salt Lake City,

Utah. Borrowing limitations are based on approximately 45% of eligible inventory

and up to 80% of eligible accounts receivable. Interest payments on the line are

due monthly. The line of credit is renewable biennially on December 15th and

includes covenants requiring the Company to maintain certain financial ratios.

As of September 30, 2008, the Company was in compliance with its loan covenants

or had received waivers for any noncompliance.



The current ratio was 1.5 to 1 at September 30, 2008 and 1.5 to 1 at June 30,

2008. Current assets represented 71% of total assets at September 30, 2008,

compared to 70% at June 30, 2007.



Read the The complete Report

Rating: 4.0/5 (2 votes)

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